Pave, an online consumer lender, on Tuesday announced $8 million in equity funding.
The New York company makes two- to three-year term loans of between $3,000 and $25,000. It is seeking to distinguish itself from other digital lenders by targeting young adults who have limited credit histories.
Chief Executive Oren Bass said in an interview that he wants to lend money to people who are in stable careers, even if they do not earn big salaries.
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There are millions of businesses deserving of loans that banks using traditional data resources might overlook due to their thin credit histories.
February 17 -
Disruption in credit scoring is healthy, but the new models touted by marketplace and other alternative lenders are still untested, especially about how loans will perform in a downturn.
February 11 -
Banks want to make loans to people with scant credit histories, but the challenge is figuring out how to do so safely. One possible solution is to look at alternative data. Eager to book more loan business, more and more banks are considering such factors as rent payments, purchasing patterns, even an applicant's spelling to help predict creditworthiness.
February 24
"Nurses are a great type of individual for us to lend to because of the stability there," he said.
Rather than focusing solely on the borrower's credit score, Pave also looks at rent payments and utility payments. And it models the borrower's future earnings trajectory, according to Bass.
Pave has issued around $10 million in loans since it launched its lending product in late 2014.
The firm, which currently has around 20 employees, plans to use the new equity funding to add employees with expertise in data analytics, operations and marketing.
The funding round was led by the venture-capital firm Maxfield Capital.
In December, Pave announced that New York-based Seer Capital had agreed to provide up to $300 million in debt financing to fund the company's loans.
